Gamemaker Shakes Up NFT Royalties With New Smart Contracts

NFT Creators May Get Help on Royalties from Limit Break Plan

Gamemaker Shakes Up NFT Royalties With New Smart Contracts

It was a long time coming.

The NFT space, suffering with collapsed prices and questionable utility, received a much needed jolt in the arm on Jan. 10. A gaming company released a set of smart contracts designed to dramatically expand the tokens’ capabilities.

Chief among those extensions is providing ways for NFT creators to enforce royalties, an issue that has roiled the market as artists and marketplaces and collectors have clashed over how to divvy up proceeds from the sale of these products.

Royalty Saga

Gabriel Leydon, the CEO of the gaming company Limit Break, added the latest piece of the royalty saga with a post outlining how the fees could regain dominance after marketplaces like Magic Eden, and SudoAMM have made inroads by nixing them. 

The key in Limit Break’s proposed system is that if an NFT’s owner decides to stake their token in a new contract, the NFT’s creator can then imbue the token with essentially any feature.

As a result, the creator may be able to restrict the token to be sold solely on marketplaces that support fees. 

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There may be more tools in the works. Leydon, whose firm raised $200M in August, proposed the possibility of using Limit Break’s contracts to actually make NFT holders eligible for royalties as well. The contracts are already available on Github

“Including collectors as stakeholders for royalties is a powerful way that creators can align incentives with their community of NFT holders,” Limit Break’s post said. 

Making holders eligible for royalties could spur the community to drive value to the NFTs.

Making holders eligible for royalties could spur the community to drive value to the NFTs. Thanks to the general purpose programmability of Limit Break’s contracts, Leydon proposed more refined mechanisms, like whitelisting holders for royalty fees only after a year of ownership of an NFT or giving a higher percentage of royalties to longer term holders.

There is a catch to Limit Break’s system however — NFT owners must opt-into staking. This may be easy or hard to incentivize based on the project. 

Share of Royalties

“Because it’s opt-in, the person doesn’t have to do it, so you have to make it cool,” Leyden said on a Twitter Space

The promise of getting a share of royalties may be enough. Or new NFT projects may ask users to stake in order to reveal the specific attributes of their token.  

Other potential use cases of the staking functionality may be that NFT owners will be able to rent their tokens to other people who may want to use them in a game, Limit Break proposed in its post. NFTs could also be staked to make them eligible for rewards.

Leydon was adamant on his company’s Twitter Space that new use cases would be developed that he hadn’t yet anticipated. 

The most controversial application of the opt-in system was that of minimum price floors, where basically, a staked token will only be tradable for a certain amount. 

Leydon underscored the importance of this functionality in games, where fluctuating prices can be destabilizing. “As a game developer, one of the problems I see with Web3 is that all of the in-game assets trade with the market, so if Bitcoin crashes, your game crashes,” Leydon said on the Space. “I think that’s really important to video games, that concept of enduring value.”

Simply a Tool

Other people weren’t sold. Punk 6529, a well-known thought leader in the crypto space, was one person calling out what they saw as the infeasibility of Limit Break’s proposal. 

Leydon has countered, generally emphasizing that Limit Break’s contracts are simply a tool, not something which will fit in all circumstances. 

Contracts

Limit Break also is the firm behind Digidagaku, an NFT collection with a 12.95 ETH floor price and whose Twitter account has over 100,000 followers. 

Looking forward, the company’s post introducing the opt-in NFT system says it, as well as the Digidaigaku team, haven’t yet decided on how to implement the contracts. 

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